TCI NIB Annual Report 2016 & 2017

CONTENTS FINANCIAL STATEMENTS TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Financial Statement | Year Ended - March 31, 2017 2017 Independent Auditor’s Report 98-101 Statement of Financial Position 102 Statement of Income, Expenses and Reserves 103 Long-Term Benefit Branch 104 Short-Term Benefit Branch 105 Employment Injury Benefit / Disablement and Death Benefit 106 Statement of Changes in Reserves 107 Statement of Cash Flows 108 Notes to Financial Statement 109-159 97

KPMG Ltd. KPMG Building 18 The Village at Grace Bay PO Box 357 Providenciales Turks and Caicos Islands, BWI Telephone: 649 946 4613, Fax: 649 946 4619 FINANCIAL INDEPENDENT AUDITORS’ REPORT STATEMENTS To the Directors of the Turks and Caicos Islands National Insurance Board: 2017 Report on the Audit of the Financial Statements Qualified Opinion We have audited the financial statements of the Turks and Caicos Islands National Insurance Board (NIB), which comprise the statement of financial position as at March 31, 2017, the statements of income, expenses and reserves, changes in reserves and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information. In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of NIB as at March 31, 2017, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS). Basis for Qualified Opinion As disclosed at notes 10 and 12 to these financial statements on April 9, 2010, TCI Bank Limited (TCI Bank) was placed into provisional liquidation and on October 29, 2010, TCI Bank was placed into liquidation. At March 31, 2017 and 2016, NIB held substantial long- term deposits with TCI Bank, a current account with TCI Bank and an investment in TCI Bank. NIB’s management have made certain fair value adjustments in relation to NIB’s various asset holdings with TCI Bank. Such fair value adjustments are disclosed more fully in the aforementioned notes to these financial statements and they include, but are not restricted to, a 56% fair value adjustment against the carrying value of NIB’s long- term deposits and current account with TCI Bank. As at the date of this report NIB had received interim distributions of 40 cents in the dollar from the liquidator in respect of its long term deposits and current account. KPMG Ltd., a Turks and Caicos Islands limited liability company incorporated under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 98

Turks and Caicos Islands National Insurance Board FINANCIAL Independent Auditors’ Report STATEMENTS March 31, 2017 2017 Basis for Qualified Opinion, continued The ultimate outcome of this matter cannot presently be determined with certainty and the actual fair value adjustment that will ultimately be needed against the carrying value of NIB’s various asset holdings with TCI Bank under IAS 39, ‘Financial Instruments: Recognition and Measurement’, can only be estimated using information available as at the date of this report and could vary significantly from the estimate provided because of the considerable inherent uncertainty involved. Consequently, the impact on the statement of financial position of the carrying value of these asset holdings with TCI Bank and the impact of the changes in fair value reported in the statements of income, expenses and reserves, as a consequence of TCI Bank being placed into provisional liquidation and subsequently into liquidation, cannot currently be estimated with any reasonable certainty and may be material. We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of NIB in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Emphasis of Matter Without further qualifying our opinion, we draw attention to note 23 to these financial statements. As disclosed at note 23 to these financial statements, NIB has elected to apply IAS 26, ‘Accounting and Reporting by Retirement Benefit Plans’, which requires the actuarial present value of promised retirement benefits to be recognised on the statement of financial position, in the notes to the financial statements or in an accompanying actuarial report. NIB has chosen to disclose the actuarial present value of promised retirement benefits of US$459 million at March 31, 2016 (2013: US$388 million), the date of NIB’s latest actuarial review, using a current salary approach, in the notes to these financial statements. NIB had total reserves of US$191 million at March 31, 2016 (2013: US$153 million) and there was therefore a shortfall of US$268 million (2013: US$235 million) between the total reserves and the actuarial present value of promised retirement benefits. KPMG Ltd., a Turks and Caicos Islands limited liability company incorporated under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 2 99

FINANCIAL Turks and Caicos Islands National Insurance Board STATEMENTS Independent Auditors’ Report March 31, 2017 2017 Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing NIB’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate NIB or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing NIB’s financial reporting process. Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of NIB’s internal control. KPMG Ltd., a Turks and Caicos Islands limited liability company incorporated under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 100 3

Turks and Caicos Islands National Insurance Board Independent Auditors’ Report March 31, 2017 Auditors’ Responsibilities for the Audit of the Financial Statements, continued  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.  Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on NIB’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause NIB to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Turks and Caicos Islands’ National Insurance Ordinance 1991 and National Insurance (Financial and Accounting) Regulations (hereafter referred to collectively as ‘the Ordinance’), we also confirm that the presentation, structure and content of the financial statements of NIB at March 31, 2017 and for the year then ended is consistent with the requirements of the Ordinance. Intended Use of Report This report is intended solely for the information and use of the Minister of Finance of TCI and the Directors of NIB and should not be relied on by anyone other than these specified parties. Chartered Accountants FINANCIAL Providenciales, Turks and Caicos Islands STATEMENTS October ___, 2018 2017 KPMG Ltd., a Turks and Caicos Islands limited liability company incorporated under the Turks and Caicos Islands’ Companies Ordinance, is the Turks and Caicos Islands member firm of KPMG International, a Swiss cooperative. 4 101

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Statement of Financial Position At March 31, 2017 with comparative figures at March 31, 2016 2017 2016 Assets US$ 20,639,287 37,006,816 3,679,532 3,696,239 Current assets: 4,200,000 – Cash and cash equivalents (note 5) 150,000 150,000 Contributions and other receivables (note 6) 35,216 28,416 Short-term investment (note 7) Current portion of long-term receivables (note 9) 28,704,035 40,881,471 Other assets 215,109,460 178,039,019 Non-current assets: 5,547,584 718,379 Available-for-sale financial assets (note 8) 694,100 694,100 Long-term receivables (note 9) 3,441,894 Long-term deposits (note 10) – 3,582,184 Property and equipment (note 11) – Investment in TCI Bank Limited (note 12) 224,793,038 183,033,682 US$ 253,497,073 223,915,153 Liabilities and Reserves US$ 2,413,153 2,174,757 Liabilities: 32,280,000 30,400,000 Accounts payable and 34,693,153 32,574,757 accrued expenses (note 13) Provisions for long-term benefits, 157,131,023 139,838,179 other than retirement benefits (note 23) 26,166,302 22,406,428 1,072,256 1,313,743 Reserves: 34,434,339 27,782,046 Long-term benefit branch Short-term benefit branch 218,803,920 191,340,396 Employment injury benefit (note 22) Disablement and death benefit FINANCIAL US$ 253,497,073 223,915,153 STATEMENTS The accompanying notes are an integral part of these financial statements. These financial statements were approved on behalf of the Board of Directors 2017 on October ___, 2018 by the following: Samuel Swann Chairman Rhesa Cartwright Director 102 5

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Statement of Income, Expenses and Reserves Year ended March 31, 2017 with comparative figures for year ended March 31, 2016 2017 2016 Income: US$ 29,265,197 27,251,478 Contributions: 1,697,166 1,492,903 Private sector 738,516 792,533 Civil servants – 277 Self employed Voluntary 31,700,879 29,537,191 Income from, and net realised gains on, available-for-sale financial assets (note 14) 9,644,527 4,039,994 Surcharges 644,280 579,293 Interest and other income (note 15) 497,939 407,032 Expenses: 42,487,625 34,563,510 Benefits (note 16) General and administrative expenses (note 17) (14,541,749) (14,007,130) Change in provisions for long-term benefits, (4,776,481) (4,518,997) other than retirement benefits (note 23) Investment expenses (note 18) (1,880,000) (1,300,000) (1,235,244) (1,164,008) (22,433,474) (20,990,135) Net income before other comprehensive income/(loss) 20,054,151 13,573,375 7,409,373 (13,293,503) Other comprehensive income/(loss) (note 19) 27,463,524 279,872 Net income for year US$ Net income for year transferred to: US$ 17,292,844 (2,131,821) Long-term benefit branch reserve US$ 3,759,874 471,208 Short-term benefit branch reserve (241,487) 476,652 Employment injury benefit reserve 6,652,293 Disablement and death benefit reserve 1,463,833 27,463,524 279,872 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS 2017 6 103

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Long-Term Benefit Branch Statement of Income, Expenses and Reserve Year ended March 31, 2017 with comparative figures for year ended March 31, 2016 2017 2016 Income: US$ 20,119,822 18,735,391 Contributions: 1,362,688 1,198,682 Private sector 597,329 641,019 Civil servants – 277 Self employed Voluntary 22,079,839 20,575,369 Income from, and net realised gains on, available-for-sale financial assets 7,048,554 3,001,970 Surcharges 453,270 415,883 Interest and other income 363,911 302,451 Expenses: Benefits (note 16) 29,945,574 24,295,673 General and administrative expenses Change in provisions for long-term benefits, (11,724,755) (10,786,926) other than retirement benefits (3,200,242) (3,027,728) Investment expenses (2,240,000) (1,870,000) (902,759) (864,931) (18,067,756) (16,549,585) Net income before other comprehensive income/(loss) 11,877,818 7,746,088 5,415,026 (9,877,909) Other comprehensive income/(loss) (2,131,821) 17,292,844 Net income/(loss) for year US$ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS 2017 104 7

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Short-Term Benefit Branch Statement of Income, Expenses and Reserve Year ended March 31, 2017 with comparative figures for year ended March 31, 2016 2017 2016 Income: US$ 4,755,595 4,428,365 Contributions: 141,187 151,514 Private sector 37,164 32,691 Self employed Civil servants 4,933,946 4,612,570 Income from, and net realised gains on, available-for-sale financial assets 1,129,398 463,822 Surcharges 107,136 98,300 Interest and other income 58,310 46,730 Expenses: 6,228,790 5,221,422 Benefits (note 16) General and administrative expenses (2,379,920) (2,322,151) Investment expenses (812,002) (768,229) (144,650) (133,637) (3,336,572) (3,224,017) Net income before other comprehensive income/(loss) 2,892,218 1,997,405 867,656 (1,526,197) Other comprehensive income/(loss) 3,759,874 471,208 Net income for year US$ The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS 2017 8 105

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Employment Injury Benefit / Disablement and Death Benefit Statement of Income, Expenses and Reserves Year ended March 31, 2017 with comparative figures for year ended March 31, 2016 2017 2016 Income: US$ 4,389,780 4,087,722 Contributions: 297,314 261,530 Private sector Civil servants 4,687,094 4,349,252 Income from, and net realised gains on, available-for-sale financial assets 1,466,575 574,202 Change in provisions for long-term benefits, other than retirement benefits 360,000 570,000 Surcharges 83,874 65,110 Interest and other income 75,718 57,851 Expenses: 6,673,261 5,616,415 Benefits (note 16) General and administrative expenses (437,074) (898,053) Investment expenses (764,237) (723,040) (187,835) (165,440) (1,389,146) (1,786,533) Net income before other comprehensive income/(loss) 5,284,115 3,829,882 1,126,691 (1,889,397) Other comprehensive income/(loss) 6,410,806 1,940,485 Net income for year US$ Net income for year transferred to: US$ (241,487) 476,652 Employment injury benefit reserve US$ 6,652,293 1,463,833 Disablement and death benefit reserve 6,410,806 1,940,485 The accompanying notes are an integral part of these financial statements. FINANCIAL STATEMENTS 2017 106 9

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Statement of Changes in Reserves Year ended March 31, 2017 with comparative figures for year ended March 31, 2016 Long-term Short-term Employment Disablement and benefit branch benefit branch injury benefit death benefit Total US$ US$ US$ US$ US$ 191,060,524 Balance at April 1, 2015 141,970,000 21,935,220 837,091 26,318,213 Transfer from net income for year (2,131,821) 471,208 476,652 1,463,833 279,872 Balance at March 31, 2016 139,838,179 22,406,428 1,313,743 27,782,046 191,340,396 Balance at April 1, 2016 139,838,179 22,406,428 1,313,743 27,782,046 191,340,396 Transfer from net income for year 17,292,844 3,759,874 (241,487) 6,652,293 27,463,524 Balance at March 31, 2017 157,131,023 26,166,302 1,072,256 34,434,339 218,803,920 The accompanying notes are an integral part of these financial statements. 107 FINANCIAL STATEMENTS 10 2017

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Statement of Cash Flows Year ended March 31, 2017 with comparative figures for year ended March 31, 2016 2017 2016 Cash flows from operating activities: US$ 20,054,151 13,573,375 Net income before other comprehensive income/(loss) 20,795 Adjustments for: 20,834 Change in fair value of TCIG bonds (note 15) 268,763 315,101 Depreciation of property and equipment (352,912) (276,720) Interest income (note 15) 1,112,890 Investment expenses on available-for-sale (9,644,527) 1,036,123 financial assets (note 18) 11,459,160 Income from, and net realised gains on, 182,395 (4,039,994) available-for-sale financial assets 10,628,719 (6,800) Changes in operating assets: 238,396 (560,557) Change in contributions and other receivables 1,880,000 (463) Change in other assets 13,753,151 544,847 Changes in operating liabilities: (83,885,455) Change in accounts payable and accrued expenses 62,756,024 1,300,000 Change in provisions for long-term benefits, (5,000,000) 11,912,546 other than retirement benefits (4,200,000) (50,602,475) Net cash from operating activities 187,224 34,813,913 150,000 Cash flows used in investing activities: (128,473) – Net additions to available-for-sale financial assets – Net proceeds from available-for-sale financial assets – 384,608 Investment in Fortis TCI Limited bonds 150,000 Short-term investment – (251,450) Interest income received (30,120,680) 3,470,498 Proceeds from partial repayment of TCIG bonds Additions to property and equipment 1,853,811 Proceeds from partial repayment of long-term deposits (10,181,095) Proceeds from repayment of TCI Investment Agency Ltd. loans Net cash used in investing activities Net (decrease)/increase in cash and cash equivalents (16,367,529) 1,731,451 FINANCIAL Cash and cash equivalents at beginning of year US$ 37,006,816 35,275,365 STATEMENTS Cash and cash equivalents at end of year 20,639,287 37,006,816 2017 The accompanying notes are an integral part of these financial statements. 108 11

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements 2017 Year ended March 31, 2017 1. General information The Turks and Caicos Islands National Insurance Board (NIB) is a body corporate established in the Turks and Caicos Islands (TCI) on April 6, 1992 pursuant to section 27 of the National Insurance Ordinance 1991 (the Ordinance), as revised. NIB’s primary purpose is to control and manage the National Insurance Fund (“the Fund”) established under section 45 of the Ordinance so as to provide various benefits to persons insured under the Ordinance. NIB’s registered office address is at the Hon. L. Headley Durham building, Grand Turk, TCI. 2. Basis of preparation (a) Statement of accounting These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and with the requirements of the Ordinance. Details of NIB’s significant accounting policies are included at note 3. These financial statements have been prepared on a fair value basis for all assets held for investment purposes and under the historical cost convention for all other assets and liabilities. The methods used to measure fair values are discussed further at note 4. (b) Functional and presentation currency These financial statements are presented in United States (US) dollars, which is NIB’s functional currency. All financial information presented in US dollars has been rounded to the nearest dollar. (c) Use of estimates and judgements The preparation of these financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes: 12 109

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 2. Basis of preparation, continued (c) Use of estimates and judgements, continued  Note 6 – Contributions and other receivables  Note 10 – Long-term deposits  Note 12 – Investment in TCI Bank Limited  Note 13 – Accounts payable and accrued expenses  Note 16 – Benefits  Note 23 – Actuarial review  Note 24 – Contingent liabilities  Note 25 – Commitments These financial statements have been prepared on a going concern basis. No adjustments or reclassifications have been made that might be necessary if a basis of accounting other than a going concern basis were to be used. 3. Significant accounting policies The accounting policies set out below have been applied to all periods presented in these financial statements, and have been applied consistently by NIB. Certain comparative amounts have been reclassified to conform with the current year’s financial statement presentation. (a) Non-derivative financial instruments NIB classifies non-derivative financial assets into the following categories: loans and receivables and available-for-sale financial assets. NIB classifies non-derivative financial liabilities as other financial liabilities. (i) Non-derivative financial assets and financial liabilities – Recognition and derecognition NIB initially recognises loans and receivables and debt securities issued on the date when they are originated. All other financial assets and financial liabilities are initially recognised on the trade date when the entity becomes a party to the contractual provisions of the instrument. NIB derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by NIB is recognised as a separate asset or liability. 110 13

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 3. Significant accounting policies, continued (a) Non-derivative financial instruments, continued (i) Non-derivative financial assets and financial liabilities – Recognition and derecognition, continued NIB derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. Financial assets and financial liabilities are offset and the net amount presented on the statement of financial position when, and only when, NIB currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. The gross carrying amount of a financial asset is written-off (either partially or in full) to the extent that there is no prospect of recovery. This is generally the case when NIB determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to write-off. However financial assets that are written -off could still be subject to enforcement activities in order to comply with NIB's procedures for the recovery of the amounts due. (ii) Non-derivative financial assets – Measurement Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest rate method. The effective interest rate method is a method that is used in the calculation of the amortised cost of a financial asset or a financial liability and in the allocation and recognition of the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset or to the amortised cost of a financial liability. Subsequent to initial recognition loans and receivables held for investment purposes are measured at fair value with changes in fair values recognised in the statement of income, expenses and reserves in accordance with International Accounting Standard 26, ‘Accounting and Reporting by Retirement Benefit Plans’ (IAS 26). 14 111

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 3. Significant accounting policies, continued (a) Non-derivative financial instruments, continued (ii) Non-derivative financial assets – Measurement, continued Loans and receivables, continued Loans and receivables not held for investment purposes are measured at amortised cost subsequent to initial recognition. Loans and receivables comprise: cash and cash equivalents, contributions and other receivables, short-term investment, long-term receivables and long-term deposits. Cash and cash equivalents comprise cash on hand, cash at investment managers and cash at banks - savings and current accounts. Cash equivalents are short-term highly liquid investments with maturities of three months or less from the acquisition date that are subject to an insignificant risk of change of value and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Debt instruments that are not quoted in an active market are classified as loans and receivables. Contributions and other receivables comprise outstanding contributions from private employers and the self-employed, interest receivable and other receivables. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any of the previous categories. NIB’s investments in equity and debt securities are classified as available-for- sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein are recognised as other comprehensive income in the statement of income, expenses and reserves. (iii) Non-derivative financial liabilities – Measurement Non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest rate method. NIB’s non-derivative financial liabilities are accounts payable and accrued expenses. 112 15

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 113 3. Significant accounting policies, continued (b) Provisions A provision is recognised if, as a result of a past event, NIB has a present legal or constructive obligation that can be reliably estimated, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability. Per IAS 26 NIB has an option as to whether it discloses the actuarial present value of promised retirement benefits on the statement of financial position, in the notes to the financial statements or in an accompanying actuarial report. NIB has elected to disclose the actuarial present value of promised retirement benefits in a note to the financial statements (note 23). The actuarial present value of long-term benefits, other than retirement benefits, was quantified by an independent actuary at March 31, 2016 and 2017 (note 23) and recognised in NIB’s financial statements in accordance with IAS 37 and IAS 1, Presentation of Financial Statements. (c) Property and equipment (i) Recognition and measurement Property and equipment are measured at cost less accumulated depreciation and impairment losses (note 3(f)(ii)). Cost includes expenditures that are directly attributable to the acquisition of property and equipment. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment. Gains or losses arising from the disposal of property and equipment are reflected in the statement of income, expenses and reserves. (ii) Subsequent costs The cost of replacing an item of property and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to NIB and its cost can be reliably measured. The carrying amount of the replaced part is derecognised. The cost of the day- to-day servicing of property and equipment is recognised in the statement of income, expenses and reserves, as incurred. 16

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 3. Significant accounting policies, continued (c) Property and equipment, continued (iii) Depreciation Depreciation is recognised in the statement of income, expenses and reserves on a straight-line basis over the estimated useful lives of each part of an item of property and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Land is not depreciated. Estimated useful lives for the current and comparative periods are as follows: Buildings 25 years Furniture & Fixtures 3-10 years Computer Equipment 3-10 years Motor Vehicles 4 years Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted, if necessary. (d) Reserves The TCI National Insurance (Financial and Accounting) Regulations (the Regulations) require benefits and reserves to be grouped into separate benefit branches (the Benefit Branches) and reserves, respectively, as follows: (i) Long-term Benefit Branch, comprising retirement benefit, invalidity pension, survivors’ benefit, funeral grant and non-contributory old age pension. A Long-term Benefit Reserve is constituted by annually transferring the excess of income over expenses of the Long-term Benefit Branch. FINANCIAL (ii) Short-term Benefit Branch, comprising sickness benefit and maternity benefit. STATEMENTS A Short-term Benefit Reserve is constituted by annually transferring the excess 2017 of income over expenses of the Short-term Benefit Branch. (iii) Employment Injury Benefit Branch, comprising injury benefit, disablement benefit, death benefit, death grant payable on death due to employment injury and medical care. An Employment Injury Benefit Reserve is constituted to finance employment injury benefit, disablement grant, death grant and medical care by annually transferring that part of the net income of the Employment Injury Benefit Branch that is sufficient to maintain the level of the reserve at one-half of the amount paid for the said benefits in the two previous financial years. 114 17

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 115 3. Significant accounting policies, continued (d) Reserves, continued (iv) A Disablement and Death Benefit Reserve is constituted by annually transferring the remaining net income of the Employment Injury Benefit Branch, after the aforementioned transfer has been made to the Employment Injury Benefit Reserve in accordance with the Regulations. Further information on the allocation of income and expenses to the reserves is shown at note 3(e)(v). (e) Revenue and expense recognition (i) Contribution and surcharge income Contribution income is recognised on an accruals basis, at the requisite statutory rates, utilising employer monthly contribution statements, which are settled in arrears. Surcharges are recognised on an accruals basis at the requisite statutory rates. (ii) Rental income Rental income is recognised in the statement of income, expenses and reserves on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income over the term of the lease. (iii) Investment income Investment income comprises interest income on funds invested (including available-for-sale financial assets), dividend income, gains on the disposal of available-for-sale financial assets and change in market value of available-for- sale financial assets. Interest income is recognised in the statement of income, expenses and reserves as it accrues, using the effective interest rate method. Dividend income is recognised in the statement of income, expenses and reserves on the date that NIB’s right to receive payment is established, which, in the case of quoted securities, is the ex-dividend date. Gains on the disposal of available-for-sale financial assets are included in the statement of income, expenses and reserves in the period in which they arise. (iv) Benefits, general and administrative expenses Expenditure on benefits is recognised when NIB’s obligation to make a payment has been established, which is generally upon approval of a claim. General and administrative expenses are recognised on an accruals basis. 18

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 3. Significant accounting policies, continued (e) Revenue and expense recognition, continued (iv) Benefits, general and administrative expenses, continued Long-term benefits such as retirement pension, old age non contributory, survivors, invalidity pension, retirement, funeral and survivors grants are generally recognised upon approval of a claim subject to the provisions of sections 3(1), 53(1), 14(1), 7(1), 3(4), 20(1) and 14(2) of the TCI National Insurance (Benefit) Regulations (the Benefit Regulations), respectively. Short-term benefits such as maternity allowance, sickness and maternity grants are generally recognised upon approval of a claim subject to the provisions of sections 28(1), 22(1) and 33(1) of the Benefit Regulations, respectively. Employment injury benefits such as disablement, death and injury are generally recognised upon approval of a claim subject to the provisions of sections 39(1), 45 and 35(1) of the Benefit Regulations, respectively. As disclosed at notes 3(i) and 23, NIB has chosen to disclose the actuarial present value of promised retirement benefits and other long-term benefits in the notes to these financial statements as per IAS 26. An actuarial valuation is performed every 3 years. The latest valuation was performed as at March 31, 2017. Certain results of the actuarial valuation as at March 31, 2016 are disclosed further at note 23. The actuarial present value of long-term benefits, other than retirement benefits, was quantified by an independent actuary at March 31, 2016 and 2017 (note 23) and recognised in NIB’s financial statements in accordance with IAS 37. (v) Basis of apportionment of income and expenses The statutory rates of total contributions, which are applied on an employed and self-employed person’s earnings and stipulated under sections 4, 14 and 19 of the TCI National Insurance (Contributions) Regulations (the Contributions Regulations), are as follows: Civil Servants 6.85%; Private Sector (general) 8.00%; Private Sector (under section 4(3) of the Contributions Regulations) 2.50%; Self Employed 6.80%; and Voluntary 5.50%. Section 4(3) of the Contributions Regulations relates to the employment of a temporary resident employed person on which contributions are payable at a rate of 2.5% and not the standard 8% for all other private sector workers. 116 19

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 3. Significant accounting policies, continued (e) Revenue and expense recognition, continued (v) Basis of apportionment of income and expenses, continued Section 13(1) of the Regulations provides that the aforementioned total contribution and surcharge income (note 3(e)(i)) shall be allocated among the Benefit Branches as follows: Contributions from: Long-Term Short-Term Employment Benefit Benefit Injury Benefit Civil Servants Branch Branch Private Sector (general) Branch Private Sector (under section 5.50 / 6.85 0.15 / 6.85 5.50 / 8.00 1.30 / 8.00 1.20 / 6.85 4(3) of the Contributions 1.20 / 8.00 Regulations) – Self Employed 5.50 / 6.80 1.30 / 2.50 1.20 / 2.50 Voluntary 10.0 / 10.0 1.30 / 6.80 – – – Effective April 1, 2016 a new contribution ceiling was implemented by NIB increasing from US$700/week or US$3,000/month to US$810/week or US$3,500/month. Effective April 1, 2017 the contribution ceiling will further increase to US$925/week or US$4,000/month. Section 13(2) of the Regulations provides that income from investments of reserves shall be allocated to the Benefit Branches in proportion to the amount of the reserve of each Benefit Branch at the beginning of the respective year. Investment income and expenses for the year ended March 31, 2017 and 2016 were allocated as follows: Long-Term Benefit Branch 2017 2016 Short-Term Benefit Branch Employment Injury Benefit Branch 73.08% 74.31% 11.71% 11.48% 15.21% 14.21% FINANCIAL 100.00% 100.00% STATEMENTS Section 14(1) of the Regulations provides that expenditure on each benefit shall 2017 be ascribed to the appropriate branch. Section 14(2) of the Regulations provides that the administrative expenditure of NIB shall be distributed among the Long-Term Benefit Branch, Short-Term Benefit Branch and Employment Injury Benefit Branch in the proportion of 67%, 17% and 16%, respectively. 20 117

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 3. Significant accounting policies, continued (f) Impairment (i) Non-derivative financial assets Financial assets not held for investment purposes are assessed at each reporting date to determine whether there is objective evidence of impairment. Objective evidence that financial assets are impaired includes:  default or delinquency by a debtor;  restructuring of an amount due to NIB on terms that NIB would not consider otherwise;  indications that a debtor or issuer will enter bankruptcy;  adverse changes in the payment status of borrowers or issuers;  the disappearance of an active market for a security because of financial difficulties; or  observable data indicating that there is a measurable decrease in the expected cash flows from a group of financial assets. In addition, for an investment in an equity security, objective evidence of impairment includes a significant or prolonged decline in its fair value below its cost. NIB considers a decline of 20% to be significant and a period of nine months to be prolonged. Financial assets measured at amortised cost NIB considers evidence of impairment for these assets (loans and receivables) at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics. In assessing collective impairment, NIB uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the actual losses are likely to be greater or lesser than suggested by historical trends. 118 21

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 119 3. Significant accounting policies, continued (f) Impairment, continued (i) Non-derivative financial assets, continued Financial assets measured at amortised cost, continued An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in the statement of income, expenses and reserves and reflected in an allowance account against loans and receivables. When NIB considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed in the statement of income, expenses and reserves. Available-for-sale financial assets Impairment losses on available-for-sale financial assets are recognised by NIB in the statement of income, expenses and reserves. Changes in cumulative impairment losses attributable to application of the effective interest rate method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt and equity security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in the statement of income, expenses and reserves, then the impairment loss is reversed by NIB, with the amount of the reversal recognised in the statement of income, expenses and reserves. (ii) Non-financial assets At each reporting date, NIB reviews the carrying amounts of its non-financial assets to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. 22

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 FINANCIAL 3. Significant accounting policies, continued STATEMENTS (f) Impairment, continued 2017 (ii) Non-financial assets, continued Impairment losses are recognised in the statement of income, expenses and reserves. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (g) Leases (i) Operating leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Assets leased out under operating leases are included in investment property on the statement of financial position. Rental expenses and rental income are recognised in the statement of income, expenses and reserves on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total rental expenses, over the term of the lease. (ii) Finance leases Assets held by NIB under leases which transfer substantially all of the risks and rewards of ownership to NIB are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Assets held under other leases are classified as operating leases and are not recognised on NIB’s statement of financial position. NIB considers whether a lease is a finance lease or an operating lease based on the substance of the transaction rather than the form. The following characteristics are considered by NIB that would normally lead to a lease being classified as a finance lease:  the lease transfers ownership of the underlying asset to the lessee by the end of the lease term;  the lessee has the option to purchase the underlying asset at a price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception date, that the option will be exercised; 120 23

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 121 3. Significant accounting policies, continued (g) Leases, continued (ii) Finance leases, continued  the lease term is for the major part of the economic life of the underlying asset even if title is not transferred;  at the inception date, the present value of the lease payments amounts to at least substantially all of the fair value of the underlying asset; and  the underlying asset is of such a specialised nature such that only the lessee can use it without major modifications. (h) Taxation Under current TCI law, NIB is not required to pay any taxes in TCI on either income or capital gains. Consequently, no tax liability or expense has been recorded in these financial statements. (i) Actuarial present value of promised retirement benefits IAS 26 permits the recognition of long-term liabilities for retirement benefits on the statement of financial position, in the notes to the financial statements or in an accompanying actuarial report. NIB has elected to recognise the actuarial present value of its promised retirement benefits in the notes to the financial statements (note 23). The actuarial present value of other long-term benefits have been recognised as a liability for all reporting periods. (j) Related parties A related party is a person or entity that is related to the entity that is preparing its financial statements. (i) A person or a close member of that person’s family is related to a reporting entity if that person:  has control or joint control over the reporting entity;  has significant influence over the reporting entity; or  is a member of the key management personnel of the reporting entity, or of a parent of the reporting entity. (ii) An entity is related to a reporting entity if any of the following conditions apply:  The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).  One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). 24

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 FINANCIAL 3. Significant accounting policies, continued STATEMENTS (j) Related parties, continued 2017 (ii) An entity is related to a reporting entity if any of the following conditions apply:, continued  Both entities are joint ventures of the same third party.  One entity is a joint venture of a third entity and the other entity is an associate of the third entity.  The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to the reporting entity.  The entity is controlled, or jointly controlled, by a person identified above.  A person identified above has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).  The entity, or any member of a group of which it is a part, provides key management personnel services to the reporting entity or to the parent of the reporting entity. Related party transactions pertain to transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged. (k) New standards, amendments to standards and interpretations not yet adopted The following are new standards, amendments and interpretations to published standards, issued but not effective for the financial year beginning April 1, 2016 and not early adopted by NIB:  IFRS 9, Financial Instruments – IFRS 9, published in July 2014, replaces the existing guidance in IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. Although the permissible measurement bases for financial assets, amortised cost, fair value through other comprehensive income and fair value through profit or loss, are similar to IAS 39, the criteria for classification into the appropriate measurement categories are significantly different. IFRS 9 also replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ model, which means that a loss event will no longer need to occur before an impairment allowance is recognised. 122 25

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 3. Significant accounting policies, continued (k) New standards, amendments to standards and interpretations not yet adopted, continued  IFRS 9, Financial Instruments, continued The expected credit loss model is more forward looking and will require use of reasonable and supportable forecasts of future economic conditions to determine increases in credit risk and measurement of expected credit losses. It may also result in an increase in the total level of impairment allowance as all financial assets will be assessed for impairment, and the population size will be greater than that for financial assets with objective evidence of impairment under IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted.  IFRS 15, Revenue from Contracts with Customers – IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18, Revenue, IAS 11, Construction Contracts and International Financial Reporting Interpretations Committee (IFRIC) 13, Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted.  IFRS 16, Leases – IFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. IFRS 16 provides a single lessee accounting model, requiring lessees to recognise assets and liabilities on the statement of financial position for all leases unless the lease term is 12 months or less or the underlying asset has a low value. It replaces existing leases guidance, including IAS 17, Leases, IFRIC 4, Determining whether an Arrangement contains a Lease, Standard Interpretations Committee (SIC)-15, Operating Leases - Incentives and SIC-27, Evaluating the Substance of Transactions involving the Legal Form of a Lease. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17. IFRS 16 is effective for annual reporting periods beginning on or after January 1, 2019, with early adoption permitted only for entities that also apply IFRS 15. 26 123

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 3. Significant accounting policies, continued (k) New standards, amendments to standards and interpretations not yet adopted, continued  IFRS 17, Insurance Contracts – IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity's financial position, financial performance and cash flows. IFRS 17 is effective for annual reporting periods beginning on or after January 1, 2021, with early adoption permitted only for entities that also apply both IFRS 9 and 15. NIB is currently assessing the potential future impact on its financial statements resulting from the application of IFRS 9, 15, 16 and 17. FINANCIAL STATEMENTS 2017 124 27

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD FINANCIAL STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 4. Determination of fair values A number of NIB’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes, as described below. Where applicable, further information about the assumptions made in determining fair value has been disclosed in the notes specific to that asset or liability. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. (a) Available-for-sale financial assets The fair value of available-for-sale financial assets is determined by reference to their quoted prices in active market at the reporting date. (b) Investment in, and assets held with, TCI Bank NIB’s investment in TCI Bank Limited (TCI Bank) has been accounted for using the fair value model so as to comply with IAS 26. Changes in fair value are recognised in the statement of income, expenses and reserves. The fair value of NIB’s investment in TCI Bank was assessed by NIB’s management to be US$nil at March 31, 2017 and March 31, 2016 as a consequence of TCI Bank entering provisional liquidation on April 9, 2010 and liquidation on October 29, 2010. The fair value of NIB’s other, non-secured, assets held with TCI Bank were reduced by 56% of the total amounts held at the date TCI Bank entered provisional liquidation, being management’s best estimate of an appropriate fair value adjustment in the circumstances. (c) Provisions for long-term benefits, other than retirement benefits The fair value of provisions for long-term benefits, other than retirement benefits, is estimated as the present value of future cash out flows discounted at a rate of 4.5% at the reporting date (note 23). (d) Other financial instruments Due to their short-term nature the carrying amounts of other financial assets and liabilities of NIB approximate their fair value. The fair value of financial assets and liabilities with no fixed terms of repayment cannot be determined reliably. 28 125

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 4. Determination of fair values, continued NIB has an established control framework with respect to the measurement of fair values. NIB regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then NIB assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified. Significant valuation issues are reported to the Board of Directors of NIB (the Board). When measuring the fair value of a financial instrument, NIB uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:  Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments;  Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments using: quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques in which all significant inputs are directly or indirectly observable from market data;  Level 3: inputs that are unobservable. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instruments’ valuation. This category includes instruments that are valued based on quoted prices for similar instruments for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments. Valuation techniques include net present value, discounted cash flow models and comparison with similar instruments for which an observable market exists. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates. The objective of the valuation technique is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date. If the inputs used to measure the fair value of a financial instrument fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. NIB recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. 126 29

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 5. Cash and cash equivalents 2017 2016 Cash at banks – savings and current accounts US$ 13,230,034 15,888,130 Cash at investment managers US$ 7,405,642 21,115,259 Cash on hand 3,611 3,427 20,639,287 37,006,816 The US$13,230,034 cash at banks – savings and current accounts at March 31, 2017 (2016: US$15,888,130) were held as follows: 2017 2016 CIBC First Caribbean International Bank US$ 10,532,342 7,839,381 (Bahamas) Limited (CIBC) 465,087 830,036 Interest bearing account 2,231,945 7,218,053 Non-interest bearing account 660 660 Scotiabank (Turks and Caicos) Ltd. (Scotiabank) Interest bearing account US$ 13,230,034 15,888,130 Non-interest bearing account During the year, interest bearing accounts with CIBC and Scotiabank earned interest at rates of 0.40% to 0.42% (2016: 0.40% to 0.44%). The US$7,405,642 cash held with investment managers at March 31, 2017 (2016: US$21,115,259) was held for the following investment accounts: 2017 2016 Fixed income US$ 1,264,725 16,432,719 FINANCIAL Non U.S. equities US$ 2,800,286 2,243,666 STATEMENTS U.S. equities 656,617 529,976 2017 Large cap growth 900,687 539,119 Large cap value Mid cap growth 83,977 8 Small cap core 767,087 736,564 Convertibles 654,428 528,736 Hedge funds 277,835 104,471 7,405,642 21,115,259 During the year, cash held with investment managers earned interest at rates of 0.01% (2016: 0.01%). For NIB’s internal investment guidelines cash held by investment managers is considered to be part of available-for-sale financial assets (note 21(c)(ii)). 30 127

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 6. Contributions and other receivables 2017 2016 Contributions receivable US$ 4,198,260 4,248,512 Other receivables – net US$ 617,272 520,445 Allowance for impairment 4,815,532 4,768,957 (1,136,000) (1,072,718) 3,679,532 3,696,239 The movement on the allowance for impairment of contributions receivable for the year ended was as follows: 2017 2016 At April 1 US$ 1,072,718 1,399,755 Impairment losses/(recovery) recognised (note 17) US$ 183,394 (149,644) Contributions receivable written-off (120,112) (177,393) At March 31 1,072,718 1,136,000 The US$617,272 other receivables at March 31, 2017 (2016: US$520,445) comprised the following: 2017 2016 Interest receivable – net of change in fair value US$ 363,194 197,506 of US$97,012 (2016: US$97,012) US$ 149,877 160,072 Surcharges receivable – net of change in fair value of US$1,399,322 (2016: US$1,391,449) 104,201 162,867 617,272 520,445 Other receivables – net of change in fair value of US$143,003 (2016: US$138,272) The movement on the allowance for impairment of surcharges receivable for the year ended was as follows: 2017 2016 FINANCIAL At April 1 US$ 1,391,449 1,543,617 STATEMENTS Impairment losses recognised (note 17) US$ 163,706 163,020 Surcharges receivable written-off (155,833) (315,188) 2017 At March 31 1,399,322 1,391,449 128 31

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 7. Short-term investment The US$4,200,000 short-term investment at March 31, 2017 represented a certificate of deposit with a maturity period of more than three months, but less than one year, with CIBC. The deposit earned annual interest at 1.63% and matured on May 25, 2017. 8. Available-for-sale financial assets Available-for-sale financial assets at March 31, 2017 and 2016 can be analysed as follows: Cost Market Value 2017 US$ 2016 2017 2016 US$ US$ US$ Equity securities 155,144,928 133,422,489 166,315,175 136,964,027 Government debt securities 29,628,045 26,101,808 29,251,113 26,497,832 Corporate debt securities 18,951,339 14,538,947 19,543,172 14,577,160 203,724,312 174,063,244 215,109,460 178,039,019 During the year, equity securities earned dividends with rates of return of 0.03% to 5.63% (2016: 0.73% to 5.77%) while government and corporate debt securities earned interest at rates of 1.28% to 2.81% (2016: 1.29% to 2.99%) with coupon rates ranging from 0.25% to 7.63% (2016: 0.25% to 7.63%). The US$215,109,460 available-for-sale financial assets at March 31, 2017 (2016: US$178,039,019) were held by UBS Financial Services Inc. and managed by investment managers. Available-for-sale financial assets, excluding cash held with investment managers (note 5), at March 31, 2017 and 2016 were classified per NIB’s Investment Policy Statement (IPS) (note 21(c)(ii)) as follows: 2017 2016 Non U.S. equities US$ 54,529,054 49,407,949 FINANCIAL Fixed income 38,874,962 34,101,543 STATEMENTS Hedge Funds 24,228,196 19,968,064 U.S. equities 2017 25,717,063 18,026,417 Large cap value 26,032,847 18,560,835 Large cap growth 10,359,550 Mid cap growth 10,079,342 8,160,011 Small cap core 13,086,418 10,903,237 Convertibles 10,096,854 Commodities 6,866,402 Private equity 5,335,626 5,486,112 US$ 215,109,460 3,327,997 178,039,019 A total of US$9,919,323 corporate debt securities in available-for-sale financial assets at 129 March 31, 2017 (2016: US$6,973,449) were classified as convertibles per NIB’s IPS. 32

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 9. Long-term receivables 2017 2016 Fortis TCI Limited bonds US$ 5,000,000 – TCIG bonds US$ 697,584 868,379 Less current portion 868,379 5,697,584 (150,000) (150,000) 718,379 5,547,584 (a) Fortis TCI Limited bonds On July 1, 2017, Fortis TCI Limited (Fortis) issued to NIB a US$5,000,000 unsecured bond (Fortis Bonds) with a coupon rate of 5.14% per annum and a maturity date of July 1, 2031. The Fortis Bonds are repayable in full on July 1, 2031 and interest is payable every quarter of each calendar year (January 1, April 1, July 1 and October 1). Fortis can redeem, in whole or any part, the Fortis Bonds at any time prior to June 30, 2026 at a price agreed with NIB. During the year NIB earned US$192,750 (2016: US$nil) of interest on the Fortis Bonds which was included as part of interest and other income in the statement of income, expenses and reserves. (b) TCIG bonds 2017 2016 Face value of TCIG bonds US$ 1,500,000 1,500,000 Repayment of face value US$ (900,000) (750,000) 600,000 750,000 Premiums 250,000 250,000 Accumulated change in fair value (152,416) (131,621) Fair value 697,584 868,379 During the year the change in fair value of TCIG bonds was US$20,795 (2016: US$20,834) (note 15). 2017 2016 FINANCIAL Fair value US$ 697,584 868,379 STATEMENTS Less current portion (150,000) (150,000) 718,379 2017 US$ 547,584 130 On December 28, 2009 TCI Bank, a beneficial owner of 150 non-callable bonds issued by TCIG, transferred these bonds to NIB pursuant to a Deed of Assignment. The TCIG bonds have a US$10,000 par value each, a coupon rate of 8% and a maturity date of November 30, 2021. The TCIG bonds are repayable in twenty equal semi-annual instalments of US$75,000 on the 31st day of May and the 30th day of November in each and every year commencing on May 31, 2011. 33

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 9. Long-term receivables, continued (b) TCIG bonds, continued The 150 non-callable bonds were transferred for a total cash consideration of US$1,750,000. Interest is payable on a semi-annual basis and secured by TCIG’s reserves and assets. The premium paid is being recognised as a fair value change over the period to maturity. During the year NIB earned US$31,991 (2016: US$43,967) of interest on the non- callable bonds which was included as part of interest and other income in the statement of income, expenses and reserves. The total remaining face value of TCIG bonds due at year end was as follows: 2017 2016 Within one year US$ 150,000 150,000 More than one year, less than two years US$ 150,000 150,000 More than two years, less than three years 150,000 150,000 More than three years, less than four years 150,000 150,000 More than four years 150,000 – 750,000 600,000 10. Long-term deposits 2017 2016 Current account US$ 53,849 53,849 Certificates of deposit 17,298,642 17,298,642 17,352,491 Less: first and second interim distributions 17,352,491 Current account (21,540) Certificates of deposit (21,540) (6,919,456) (6,919,456) (6,940,996) Balance (6,940,996) Current account 32,309 Certificates of deposit 32,309 10,379,186 . 10,379,186 10,411,495 Less: reductions in fair value 10,411,495 Current account (30,155) Certificates of deposit (30,155) (9,687,240) FINANCIAL . (9,687,240) (9,717,395) STATEMENTS (9,717,395) 2017 US$ 694,100 694,100 34 131

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 10. Long-term deposits, continued The carrying value of long-term deposits at year end were as follows: 2017 2016 Current account US$ 2,154 2,154 Certificates of deposit 691,946 691,946 694,100 US$ 694,100 All long-term deposits are held with TCI Bank. TCI Bank was placed into provisional liquidation on April 9, 2010 and liquidation on October 29, 2010. NIB management estimated a 56% reduction in fair value of NIB’s deposits with TCI Bank as being appropriate at March 31, 2017 and March 31, 2016, representing NIB management’s best estimate of an appropriate fair value adjustment in the circumstances. On September 10, 2012 NIB received a first interim distribution of US$3,511,002 from the liquidator of TCI Bank representing 20 cents on the dollar for NIB’s current account (US$10,770), certificates of deposit (US$3,459,728) and interest receivable (US$40,504) held with TCI Bank. On May 20, 2016 NIB received a second interim distribution of US$3,511,002 from the liquidator of TCI Bank representing 20 cents on the dollar for NIB’s current account (US$10,770), certificates of deposit (US$3,459,728) and interest receivable (US$40,504) held with TCI Bank. Due to the uncertainty regarding when, and how much, of NIB’s deposits with TCI Bank will be repaid, NIB’s management determined it appropriate to classify the current account and certificates of deposit held with TCI Bank as non-current assets for financial reporting purposes. FINANCIAL STATEMENTS 2017 132 35

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 11. Property and equipment Land and Furniture & Computer Motor Total Buildings Fixtures Equipment Vehicles US$ US$ US$ US$ US$ Cost: 4,880,639 547,414 925,141 272,481 6,625,675 228,117 2,890 20,443 – 251,450 April 1, 2015 – – – – – Additions Disposals 5,108,756 550,304 945,584 272,481 6,877,125 March 31, 2016 April 1, 2016 5,108,756 550,304 945,584 272,481 6,877,125 Additions 10,000 6,930 46,143 65,400 128,473 Disposals – – – – – March 31, 2017 5,118,756 557,234 991,727 337,881 7,005,598 Accumulated depreciation: 1,483,867 429,968 863,923 202,082 2,979,840 193,401 29,110 35,437 57,153 315,101 April 1, 2015 – – – – – Charge for the year Disposals 1,677,268 459,078 899,360 259,235 3,294,941 March 31, 2016 April 1, 2016 1,677,268 459,078 899,360 259,235 3,294,941 Charge for the year 203,197 22,974 33,317 9,275 268,763 Disposals – – – – – March 31, 2017 1,880,465 482,052 932,677 268,510 3,563,704 Carrying amounts: March 31, 2016 3,431,488 91,226 46,224 13,246 3,582,184 March 31, 2017 3,238,291 75,182 59,050 69,371 3,441,894 The cost of land included in land and buildings was US$70,500 representing US$500 for land transferred by TCIG to NIB in April 2003 and US$70,000 for land leased for 999 years by TCIG to NIB in December 2012. Included in land and buildings is the Hon. L. Headley Durham building (previously TC FINANCIAL Invest building) located on Grand Turk and a 999 year lease from TCIG on 0.56 acres of STATEMENTS land where the building is located. NIB purchased the building from TCIG in November 2012. The original cost of the building was US$1,257,808 plus incidentals of US$15,070 2017 while the total lease payment for the land for the entire 999 years was US$70,000. 36 133

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 11. Property and equipment, continued The fair value of the property, including land, in November 2012 was approximately US$1.33 million based on a September 2012 valuation, using a cost approach, by BCQS International, an external, independent valuation company, with recognised and relevant professional qualifications and recent experience in the location and category of property being valued. On January 18, 2013 TCIG granted a lease, in accordance with the provisions of the Crown Land Ordinance, to NIB for the aforementioned 0.56 acres of land. The term of the lease agreement is 999 years from the date of commencement of the lease term, being December 28, 2012. The total lease payment throughout the term of the lease is US$70,000 amortised over the lease term. Annual amortisation is included as part of depreciation expense in the statement of income, expenses and reserves. The cost of the building and the total payments for the leased land were paid in full by NIB in November 2012 as part of an Omnibus Agreement between NIB and TCIG. No impairment losses were recognised for the years ended March 31, 2017 and 2016. 12. Investment in TCI Bank Limited At March 31, 2017 NIB owned 2,000,000 (2016: 2,000,000) ordinary shares in TCI Bank with an issued value of US$2,000,000 (2016: US$2,000,000), representing approximately 15.95% of the total issued ordinary shares of TCI Bank. NIB was represented on the board of directors of TCI Bank. As disclosed at notes 10 and 21 to these financial statements NIB also held a current account and certificates of deposit with TCI Bank at March 31, 2017 and 2016. The fair value of this investment at March 31, 2017 and 2016 was assessed by NIB’s management to be US$nil as a consequence of TCI Bank entering provisional liquidation on April 9, 2010 and liquidation on October 29, 2010. 13. Accounts payable and accrued expenses 2017 2016 FINANCIAL Deferred contribution income US$ 1,004,675 263,486 STATEMENTS Accrued employment injury costs US$ 718,058 1,240,058 Accounts payable 259,536 2017 Accrued short-term benefits 221,032 177,626 Other accrued expenses 209,852 170,791 322,796 2,413,153 2,174,757 134 37

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 13. Accounts payable and accrued expenses, continued NIB is liable, per the Ordinance, for the cost of medical services provided in connection with employment injuries. NIB’s liabilities for medical costs relating to employment injuries for the period from its establishment to March 31, 2010 were settled as part of an Omnibus Agreement with TCIG. For the period from April 1, 2010 to March 31, 2017 NIB made an advance payment to the TCI National Health Insurance Board (NHIB) of US$612,000 towards medical costs in connection with employment injuries in the year ended March 31, 2011 and recognised this payment as an expense in that year. In addition, in November 2016, NIB made another payment to NHIB of US$522,000 towards medical costs in connection with employment injuries in the years ended March 31, 2013 to 2015. No medical care costs were paid or provided for during the years ended March 31, 2012 and March 31, 2013. Medical costs in connection with employment injuries of US$340,058, US$450,000 and US$450,000 were provided for during the years ended March 31, 2014, March 31, 2015 and March 31, 2016, respectively. No medical care costs were provided for during the year ended March 31, 2017. At March 31, 2017 NIB included in accounts payable and accrued expenses US$718,058 (2016: US$1,240,058) representing NIB’s best estimate of its remaining obligation for medical costs in connection with employment injuries as at that date. Subsequent to the reporting date, and having reached agreement with NHIB, in compliance with the Ordinance, NIB settled its obligations to NHIB for medical costs in connection with employment injuries at March 31, 2017. 14. Income from, and net realised gains on, available-for-sale financial assets 2017 2016 Dividend income, interest income US$ 7,884,821 3,167,724 and realised gains from equity securities 1,759,706 872,270 Interest income and realised gains US$ 9,644,527 4,039,994 from government and corporate debt securities 15. Interest and other income 2017 2016 FINANCIAL STATEMENTS Interest income from loans and receivables US$ 245,536 153,342 Interest income from savings and current accounts US$ 107,376 123,378 2017 Rental income 352,912 276,720 Other income 138,667 128,000 Change in fair value of TCIG Bond (note 9(b)) 27,155 23,146 (20,795) (20,834) 497,939 407,032 38 135

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 15. Interest and other income, continued Rental income of US$138,667 (2016: US$128,000) is from TCIG. It relates to the rental of office space included in property and equipment. 16. Benefits 2017 2016 Long-term benefits US$ 8,766,189 8,051,419 Retirement pension benefit 1,082,621 943,702 Survivors benefit 783,681 Invalidity pension 810,670 769,833 Old age non contributory 710,207 152,180 Funeral grant 203,840 81,034 Retirement grant 145,403 5,077 Survivors grant Short-term benefits 5,825 10,786,926 Maternity allowance 11,724,755 Sickness benefit 1,142,260 Maternity grant 1,189,622 943,891 Employment injury benefits/disablement 966,911 236,000 223,387 and death benefits 2,322,151 Disablement benefit 2,379,920 Death benefit Injury benefit 259,662 242,872 Constant attendance allowance 85,610 94,988 84,002 7,800 552,393 7,800 437,074 898,053 US$ 14,541,749 14,007,130 FINANCIAL Refer to note 23 for additional information on long-term benefits. STATEMENTS For the period from April 1, 2010 to March 31, 2017 NIB made an advance payment to 2017 the TCI National Health Insurance Board (NHIB) of US$612,000 towards medical costs in connection with employment injuries in the year ended March 31, 2011 and recognised 136 this payment as an expense in that year. In addition, in November 2016, NIB made another payment to NHIB of US$522,000 towards medical costs in connection with employment injuries in the years ended March 31, 2013 to 2015. No medical care costs were paid or provided for during the years ended March 31, 2012 and March 31, 2013. Medical costs in connection with employment injuries of US$340,058, US$450,000 and US$450,000 were provided for during the years ended March 31, 2014, March 31, 2015 and March 31, 2016, respectively. No medical care costs were provided for during the year ended March 31, 2017. At March 31, 2017 NIB included in accounts payable and accrued expenses US$718,058 (2016: US$1,240,058) representing NIB’s best estimate of its remaining obligation for medical costs in connection with employment injuries as at that date. 39

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 17. General and administrative expenses 2017 2016 2,408,221 Salaries and wages US$ 2,531,745 Other expenses – net 272,349 148,516 Depreciation 268,763 315,101 Professional fees 202,523 331,407 Maintenance expenses 198,008 228,760 Impairment loss/(recovery) on (149,644) contributions receivable (note 6) 183,394 163,020 Impairment loss on surcharges receivable (note 6) 163,706 119,309 Board of directors and committee allowances 134,132 105,945 Security 130,379 125,880 Insurance 126,375 104,269 Rent and utilities 106,572 Communications 99,036 76,978 Travel and subsistence 92,607 82,621 Training 89,836 44,281 Office supplies, stationery and postage 53,376 187,921 Advertising 45,382 40,661 Vehicle expenses 37,194 49,588 Employees' allowances 21,529 15,397 Computer services 14,844 111,971 Impairment loss on other receivables 4,731 8,795 US$ 4,776,481 4,518,997 18. Investment expenses 2016 2017 1,036,123 74,000 Brokers’ fees on available-for-sale financial assets US$ 1,112,890 53,885 UBS Financial Services Inc. US$ 78,000 44,354 1,164,008 Salaries of NIB’s investment personnel Other investment expenses 1,235,244 FINANCIAL STATEMENTS 2017 40 137

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 19. Other comprehensive income/(loss) The US$9,353,332 other comprehensive income for the year ended March 31, 2017 (2016: US$13,293,503 other comprehensive loss) related to changes in market value of available-for-sale financial assets in the year ended March 31, 2017 and 2016, respectively. The changes in market value of available-for-sale financial assets included in NIB’s reserves at March 31, 2017 and 2016 can be analysed as follows: Unrealised changes in market value at March 31 Movement 2017 2016 2017 Equity securities US$ 11,170,247 3,541,538 7,628,709 Government debt securities US$ (376,932) 396,024 (772,956) Corporate debt securities 591,833 38,213 553,620 7,409,373 11,385,148 3,975,775 Unrealised changes in market value at March 31 Movement 2016 2015 2016 Equity securities US$ 3,541,538 16,054,825 (12,513,287) Government debt securities US$ 396,024 634,311 (238,287) Corporate debt securities 38,213 580,142 (541,929) 3,975,775 17,269,278 (13,293,503) 20. Related party balances and transactions The following are transactions and balances with TCI Bank and TCIG, related parties by virtue of significant influence and common directors, including transactions with key management personnel, which are not separately disclosed elsewhere in these financial statements. 2017 2016 FINANCIAL TCI Bank transactions US$ – 3,470,498 STATEMENTS Partial repayment of long-term deposits US$ – 40,504 Partial repayment of interest on long-term deposits 2017 TCI Bank balances US$ 10,411,495 10,411,495 Long-term deposits (gross of change in fair value) US$ (9,814,407) (9,814,407) US$ 2,000,000 2,000,000 Reduction in fair value of assets held with TCI Bank US$ (2,000,000) (2,000,000) US$ Investment (before change in fair value) 98,084 98,084 Reduction in fair value of investment Interest receivable (gross of change in fair value) 138 41

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 20. Related party balances and transactions, continued 2017 2016 TCIG transactions US$ 4,529,350 3,953,121 Collection of contributions US$ 2,832,184 2,460,218 (Employer and employees’ contributions) US$ 1,697,166 1,492,903 US$ Contributions – private sector US$ 522,000 – (Employer and employees’ contributions) US$ 245,536 153,342 US$ 151,940 146,495 Contributions – civil servants US$ 150,000 150,000 Payment of employment injury costs to NHIB US$ 149,324 132,550 Interest income 138,667 128,000 NIB’s payment of NHIB contributions US$ Repayment of Treasury bond US$ – 1,853,811 NIB’s payment of NIB contributions – 450,000 Rent income US$ 718,058 1,240,058 Repayment of TCI Investment US$ 600,000 750,000 US$ 20,065 Agency Ltd. loans 16,008 Employment injury costs accrued TCIG balances Accrued NHIB employment injury costs Treasury bonds – at par Interest receivable Per the Ordinance, contributions from TCIG of US$1,697,166 (2016: US$1,492,903) comprise contributions relating to TCIG officers only and these are reflected in the statement of income, expenses and reserves as contributions from civil servants. Contributions for TCIG employees are charged at the same rates as the private sector and, on this basis, have been included within the private sector contributions in the statement of income, expenses and reserves and for the purpose of allocating contributions amongst branches. Key management personnel compensation US$ 2017 2016 FINANCIAL Salary of the director and deputy directors US$ STATEMENTS Housing and gratuity benefits of the director US$ 216,000 198,739 Other benefits of the director and deputy directors US$ 12,000 7,574 2017 Allowances of the board of directors 8,344 8,344 84,000 77,500 42 139

FINANCIAL TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD STATEMENTS Notes to Financial Statements, continued 2017 Year ended March 31, 2017 21. Financial instruments NIB has exposure to the following risks from its use of financial instruments: (a) Credit risk (b) Liquidity risk (c) Market risk This note presents information about NIB’s exposure to each of the above risks, NIB’s objectives, policies and processes for measuring and managing risk, and NIB’s management of capital. Further quantitative disclosures are included throughout these financial statements. Risk management framework The Minister with responsibility for National Insurance (the Minister) appoints the Directors. The Directors have full discretionary power to direct, manage, allocate and rebalance or liquidate NIB’s investments in compliance with the terms of the IPS. The Directors established the IPS which communicates the investment philosophy of the Directors regarding NIB’s investments. The IPS creates a general framework within which the investment assets of NIB can be managed. The IPS envisages a rebalancing exercise at least semi-annually to keep asset allocations within recommended ranges. At March 31, 2017 and 2016 NIB kept its asset allocation, except for Small cap core U.S. equities at March 31, 2016, within ranges recommended by the IPS (note 21 (c)(ii)). The Directors may appoint such person(s) as necessary to achieve NIB’s investment objectives. The pursuit of these objectives also involves assuming responsibility for the establishment and oversight of NIB’s risk management framework and for developing and monitoring NIB’s risk management policies. NIB’s risk management policies are established to identify and analyse the risks faced by NIB, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and NIB’s activities. The Directors appoint an Investment Committee and designate its Chairman who is a Director. The Directors also appoint an Investment Manager who has responsibility for the day to day management of NIB’s assets. NIB’s investment portfolio is comprised of mainly quoted equity securities and debt securities, long-term receivables and deposits. 140 43

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 21. Financial instruments, continued (a) Credit risk Credit risk is the risk that a contributor or counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with NIB, resulting in a financial loss to NIB. NIB’s credit risk policy is to minimise its exposure to counterparties with perceived higher risk of default by taking collateral. Credit risk is monitored on a regular basis by the Investment Committee. NIB management are of the opinion that NIB’s policies governing delinquent accounts and provisions for impairment / fair value adjustments ensure that these financial statements accurately reflect any credit risk associated with amounts due from contributors and other debtors. As explained at note 3(e)(i), NIB recognises surcharges on an accruals basis. The provision for impairment represents the estimate of incurred losses in respect of contributions receivable, excluding surcharges, and is made up of a specific loss component relating to individual exposures. The maximum exposure to credit risk is represented by the carrying amount of each financial asset on the statement of financial position. The maximum exposure to credit risk at the reporting date was: Carrying Amount 2017 2016 Current assets: US$ 20,639,287 37,006,816 Cash and cash equivalents 3,679,532 3,696,239 Contributions and other receivables 4,200,000 – Short-term investment 150,000 150,000 Current portion of long-term receivables 28,668,819 40,853,055 Non-current assets: Available-for-sale financial assets 215,109,460 178,039,019 FINANCIAL Long-term receivables 5,547,584 718,379 STATEMENTS Long-term deposits 694,100 694,100 2017 221,351,144 179,451,498 US$ 250,019,963 220,304,553 44 141

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 21. Financial instruments, continued (a) Credit risk, continued The exposure to credit risk for contributions receivable, excluding surcharges, at the reporting date, by type of counterparty and by type of contribution risk accepted, was as follows: Carrying Amount 2017 2016 Private employers US$ 2,972,193 3,088,503 Self-employed 90,067 87,291 US$ 3,062,260 3,175,794 The exposure to credit risk for contributions receivable at the reporting date, by geographical location, was as follows: 2017 Carrying Gross Impairment Amount Providenciales US$ 3,813,221 1,021,984 2,791,237 Grand Turk US$ 259,601 61,837 197,764 North Caicos 80,412 29,101 51,311 South Caicos 30,697 19,963 10,734 Pine Cay 9,182 918 8,264 Middle Caicos 3,502 1,172 2,330 Salt Cay 1,645 1,025 620 4,198,260 1,136,000 3,062,260 2016 Carrying Gross Impairment Amount FINANCIAL Providenciales US$ 3,940,140 984,277 2,955,863 STATEMENTS Grand Turk US$ 207,155 50,887 156,268 North Caicos 56,518 14,667 41,851 2017 Pine Cay 32,780 20,166 12,614 South Caicos 7,589 759 6,830 Middle Caicos 2,417 682 1,735 Salt Cay 1,913 1,280 633 4,248,512 1,072,718 3,175,794 142 45

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 21. Financial instruments, continued (a) Credit risk, continued NIB’s activities may give rise to risk at the time of settlement of transactions. Settlement risk is the risk of loss due to the failure of an entity to honour its obligations to deliver cash, securities or other assets as contractually agreed. For the vast majority of transactions NIB mitigates this risk by conducting settlements through a compliance officer to ensure that a contribution is settled only when both parties have fulfilled their contractual settlement obligations. The aging of contributions receivable, excluding surcharges, at the reporting date, by type of counterparty, was as follows: 2017 2016 Gross Impairment Gross Impairment Private employers US$ 109,259 21,853 156,387 31,276 Past due 24,975 88,623 35,449 62,440 608,060 Not later than one month 1,044,659 686,552 1,077,407 272,953 Later than one month but 2,748,342 274,836 2,729,533 937,264 3,990,883 1,018,690 4,025,767 not later than two months 4,169 Later than two months 17,348 3,469 20,842 5,293 Outstanding but not past due 121,740 Self-employed 17,792 7,117 13,233 4,252 Past due 127,016 102,202 146,169 135,454 Not later than one month Later than one month but 45,221 4,522 42,501 207,377 117,310 222,745 not later than two months Later than two months Outstanding but not past due US$ 4,198,260 1,136,000 4,248,512 1,072,718 The movement in the allowance for impairment in respect of contributions receivable FINANCIAL during the year is disclosed at note 6 to these financial statements. STATEMENTS The allowance for impairment reflects estimates of losses arising from the failure or 2017 inability of NIB’s contributors to make required payments. The allowance is based on the aging of contributor accounts, contributor credit worthiness and NIB’s historical write-off experience. Changes to the provision may be required if the financial condition of its contributors improve or deteriorate. An improvement in financial condition may result in lower actual write-offs. Historically, changes to the estimate of losses have not been material to NIB’s financial position and results of operations. 46 143

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 21. Financial instruments, continued (a) Credit risk, continued There was no change to the basis for estimating the impairment allowance for contributions receivable in the years ended March 31, 2016 and 2017. Provision is made against outstanding contributions receivable and surcharges on the following basis: 2017 2016 Outstanding but not past due 10% 10% Past due: 20% 20% 40% 40% Not later than one month 90% 90% Later than one month but not later than two months Later than two months Contributions receivable with pending legal matters that are past due for more than 90 days are 50% provided for (2016: 50%) and all surcharges receivable with pending legal matters at March 31, 2017 were 90% provided for (2016: 90%). The credit quality of available-for-sale financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (Standard & Poor’s Ratings Services and Moody's Investor Services, Inc.) or to historical information about counterparty default rates: 2017 2016 UBS Financial Services Inc. A+; A1 A+; A1 At the reporting date, NIB held financial assets with the following TCI entities: FINANCIAL CIBC 2017 2016 STATEMENTS Cash at banks – savings and current accounts Short-term investment US$ 10,997,429 8,669,417 2017 4,200,000 – Scotiabank 2,232,605 Cash at banks – savings and current accounts 5,000,000 7,218,713 600,000 – Fortis TCI Limited Fortis bonds 10,509,579 750,000 US$ 33,539,613 10,509,579 TCIG 27,147,709 Treasury bonds – at par TCI Bank (gross of change in fair value) 144 47

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 21. Financial instruments, continued (a) Credit risk, continued The following summarises financial assets held with TCI Bank at March 31, 2017 and 2016 including those deemed to have suffered a reduction in fair value: 2017 2016 Reduction in Reduction Gross fair value Gross in fair value Other receivables US$ 98,084 97,012 98,084 97,012 Long-term deposits US$ 10,411,495 9,717,395 10,411,495 9,717,395 10,509,579 9,814,407 10,509,579 9,814,407 As stated at note 10 on May 20, 2015 NIB received a second interim distribution of US$3,511,002 from the liquidator of TCI Bank representing 20 cents on the dollar for NIB’s current account (US$10,770), certificates of deposit (US$3,459,728) and interest receivable (US$40,504) held with TCI Bank. (b) Liquidity risk Liquidity risk is the risk that NIB will encounter difficulty in meeting obligations arising from its financial liabilities that are settled by delivering cash or another financial asset, or that such obligations will have to be settled in a manner disadvantageous to NIB. NIB’s policy for managing liquidity is to have sufficient liquidity to meet its liabilities, including estimated payments of benefits, as and when due, without incurring undue losses or risking damage to NIB’s reputation. NIB’s financial assets include long-term receivables which are generally illiquid. FINANCIAL STATEMENTS In addition, NIB’s deposits with TCI Bank are now subject to restrictions over their future redemption. 2017 NIB also holds a TCIG issued debt security investment which is exposed to redemption restrictions (note 9(b)). Consequently, NIB may not be able to quickly liquidate some of its investments in these instruments in order to meet its liquidity requirements. NIB’s U.S. equity securities are considered to be readily realisable as they are listed on United States stock exchanges. NIB’s overall liquidity risks are monitored on a regular basis by the Investment Committee. At the reporting date there were no significant concentrations of liquidity risk. NIB ensures that it has sufficient liquid financial assets comprising cash and cash equivalents to meet its current financial liabilities. 48 145

TURKS AND CAICOS ISLANDS NATIONAL INSURANCE BOARD Notes to Financial Statements, continued Year ended March 31, 2017 21. Financial instruments, continued (b) Liquidity risk, continued NIB’s management believe the placing of TCI Bank into liquidation has not affected NIB’s ability to meet its current financial liabilities. The following are the contractual maturities of non-derivative financial instruments, including estimated interest payments and the impact of netting agreements: Carrying Contractual 2017 More than 4 Amount cash flows 1-2 years 2-4 years years Under 1 US$ US$ US$ year US$ US$ US$ Cash and cash equivalents 20,639,287 20,639,287 20,639,287 – –– Contributions and other receivables 3,679,532 3,679,532 3,679,532 – –– Short-term investment 4,200,000 4,274,046 4,274,046 – –– Available-for-sale financial assets 3,974,172 174,306,156 16,324,717 73,118,835 Long-term receivables 215,109,460 267,723,880 (current and non-current) 5,697,584 9,434,500 452,000 440,000 844,000 7,698,500 Long-term deposits 694,100 694,100 – – – 694,100 Accounts payable and accrued (2,413,153) (2,413,153) (2,413,153) ––– expenses 247,606,810 304,032,192 30,605,884 174,746,156 17,168,717 81,511,435 Carrying Contractual 2016 More than 4 Amount cash flows 1-2 years 2-4 years years Under 1 US$ US$ US$ year US$ US$ US$ Cash and cash equivalents 37,006,816 37,006,816 37,006,816 ––– Contributions and other receivables Available-for-sale financial assets 3,696,239 3,696,239 3,696,239 ––– Long-term receivables 178,039,019 226,636,432 1,565,727 141,269,397 16,255,077 67,546,231 (current and non-current) Long-term deposits 868,379 915,000 207,000 195,000 354,000 159,000 Accounts payable and accrued 694,100 694,100 – – – 694,100 expenses (2,174,757) (2,174,757) (2,174,757) ––– 218,129,796 266,773,830 40,301,025 141,464,397 16,609,077 68,399,331 FINANCIAL Due to the uncertainties regarding the status of NIB’s assets held at TCI Bank, NIB STATEMENTS management consider it appropriate to recognise the maturity period of assets held at TCI Bank, net of the current portion, as greater than four years for liquidity disclosure 2017 purposes. 146 49